European Commission proposes ‘optimistic’ corporation tax reforms

The commission said the ongoing negotiations led by the OECD, with consensus on a new international tax system expected in the coming months, should give its plans momentum. But this is “too optimistic”, according to Zach Meyers, research fellow at the Centre for European Reform think-tank.

“The OECD proposals will probably not eliminate tax competition between member states, so some member states will probably continue to hold out on an EU-wide proposal that hinders their ability to use tax policy to attract investment,” he said.

“The timing is odd, because an agreement at the OECD is surely not far away.

“The Commission might have thought that, once the outlines of the OECD agreement are known, and we can see clearly who’s won and lost, it might be even more difficult to find EU-wide consensus.”

Countries such as Ireland and Luxembourg, which have long faced accusations of being tax havens, are likely to oppose the scheme, said Meyers.

Indeed, Irish finance minister Paschal Donohoe in a radio interview this week said he has “significant concerns” about the proposals.

“The commission hasn’t said they want to eliminate tax competition by setting a uniform EU-wide corporate tax rate, but that won’t be enough to avoid disagreement,” said Meyers.

“I think they could end up pursuing more achievable goals such as more tax transparency, for example.”